Dollar-Cost Averaging — Invest Consistently

Dollar-cost averaging (DCA) means investing a fixed dollar amount at regular intervals regardless of market price.

Example:

Invest $500/month in an S&P 500 index fund every month

When prices are high: buy fewer shares

When prices are low: buy more shares

Over time: average cost per share is lower than average price

Why DCA works psychologically:

Removes the need to "time the market"

Prevents panic selling or waiting for "the right time"

Automates the process — remove emotion

Lump sum vs. DCA:

Mathematically, lump sum investing outperforms DCA ~66% of the time (markets go up more than down)

But for most people who don't have a lump sum, DCA via paycheck contributions IS the strategy

DCA also reduces regret risk — you won't invest everything right before a crash

The key insight: Time IN the market beats timing THE market. Every year investors try to time market crashes, and every year most underperform a simple DCA strategy.

Reference:

Wikipedia: Dollar Cost Averaging

https://en.wikipedia.org/wiki/Dollar_cost_averaging